HOW MUCH MORE WOULD YOU PAY IN TAXES?
If President Obama and lawmakers fail to reach a deal to avert the fiscal cliff, how much more will you need to pay in taxes?
It depends, of course, on how much you earn. But the nonpartisan Tax Policy Center estimates that the average American would see tax bills rise by $3,446 next year. Taxpayers earning more than a $1 million will endure a $254,000 tax hike, on average, or about 11 percent of their income. Those earning $40,000 to $50,000 will see a $1,700 tax jump, or about 4.4 percent of their income.
The lowest earners would see about a $412 drop on average (a 3.7 percent cut in after-tax income), while the top 1 percent of earners would need to shell out an additional $120,000 (a 10.5 percent bite in after-tax income). Middle-class families earning between $40,000 and $65,000 annually would see taxes increase by about $2,000, leaving them with 4.4 percent less money to spend.
Why would Americans need to pay more in taxes? Because a series of tax cuts and tax credits are set to expire Jan. 1. They are the tax cuts put in place during George W. Bush's administration; a payroll tax holiday signed by Obama; and measures enacted as part of the 2009 economic stimulus that expanded the earned income tax credit and the child tax credit for working families.
Finally, million more mostly middle-class households for the first time may face the alternative minimum tax, or AMT, which could add about $3,700, on average, to tax bills. Congress has thus far failed to approve an inflation "patch" that expired last year and prevents millions of people from having to pay the tax. But congressional tax aides said the Internal Revenue Service has advised Congress that trying to fix the AMT after the filing season begins in January would lead to processing delays of more than two months for nearly half of all returns -- significantly postponing the delivery of refunds.
WASHINGTON POST
UNEMPLOYMENT BENEFITS COULD TAKE A HIT
Hovering in the background of the debate is the prospect of 2 million people losing their unemployment benefits four days after Christmas.
"This is the real cliff," said Sen. Jack Reed, D-R.I. He's been leading the effort to include another extension of benefits for the long-term unemployed in any deal to avert looming tax increases and massive spending cuts in January. "Many of these people are struggling to pay mortgages, to provide education for their children."
